ECONOMICS  F OR MANA G ERS

N a tu re:  Indi vi d ual ass ignm en t.

Assignment Ove rview :  This assi gnment i s pa rtl y bas ed  on the attached arti cle , Australian
Housing Market Review, by Arnhem Investment Management,
November 2012.  Please read this  arti cl e  care full y b ef o re  a tt em p ti ng
the  questi ons.  You wil l  be  requi red to  dem onstra te  your
understand ing  of economic concep ts taught in  the uni t and  re l a te
them to  the cases i n  the a rti cle.

Lea rn ing Ob jectives:  This assi gnment i s de sig ned to  enc ou rage  you to  th ink  about  the
appli ca tion s of economic conc ep ts l ea rned  in  th i s un it to  real  wo rl d
scena ri os.

Assess men t:  Based on the attached Rubric, y our assignment  wil l be  g ra ded on
your use  of a pp ropri a te  economi c theo ry and  concepts,  cl a ri ty of
exposi ti on a nd  o ve ra ll  quali ty of your ans we rs.  Your ans we rs
sho ul d  f o llow Gu ide to  a ssi g nment wri ti ng  and  ref e renc ing,
a va il able  at  th i s li nk : h tt p ://www.deaki n .edu .au/curr en t-
students/a ssets/resou rces/study-suppo rt/ study-skill s/assign –
re f .p df .

Ques tio n s :  Ans wer  all  ques ti ons.  Limit the to tal wo rd  count of your
assig nm ent  to  l ess th an  3 ,000  wo rds. Depth  is encou raged  o ver
b read th:  that i s,  i t i s m o re  im portant  that you dem onstra te  you
understand a  concept  full y, ra ther than  ta lk  about  3  re l a ted
concep ts onl y cursoril y. You  a re  encouraged  to  provide
necessary graphs, figures and data wherever possible.  Please
be careful in implementing referencing styles.

Total  ma rk:  40 ma rk s.  Al loca ti on as i nd i cated next  to  the q uestion.  Your sco re
on th i s assignment  con tribu tes to wa rds 40% of  your f inal  score  f or
th i s u ni t.

S ub mission:  This assi gnment m ust be submi tt ed e lectroni call y on D 2L (DS O)
D ropbox  a rea  by a l l stu den ts by 11:59pm on the d ue  date.  N o
hard  copy i s requ i red.  P rint your nam e  a nd  student  ID clearl y on
the fi rst  p age of  your answe rs.  P l ease che ck  the Acad emi c
H o nesty and  Mi sconduct  sec ti on  in  the U ni t Gu ide.  Submi tt i ng
your ans we rs autom a ti cally imp li es that you have  read  and
accep ted the Pl a gi a ri sm and Collu sion D e cl a ra ti on, and  that the
submi tt ed ans we rs a re  e nti re l y your o wn  wo rk .
1

Q ue stion  1: (8 marks)

In your own words, summarize  the  article ,  Australian Housing Market Review, by Arnhem Investment Management,
November 2012.   In particular, what are the main messages of the  article ?

Question 2:  (8 marks)

Using appropriate diagrams, figures  and data  to answer:   Are the Melbourne’s housing prices overvalued?    Why or why not?

Question 3:    (8 marks)

Suppose  that the Melbourne’s  housing market is  perfe ctly compet iti ve (i.e., many real estate developers).
T he city government  decides to levy  a buyer’s tax (specific tax) on housing purchases.
Using appropriate diagrams to answer:

(a ).  Examine the impact s of  th is  buyer’s t ax  on t he  equi libri um housing price s,
consumer surplus,  producer sur plu s, and  total  surplus (or  social  wel fare).
(b).   Can an increase in the  buyer’s  tax  raise  social welfare ?
(c ).   Can an increase in the  buyer’s  tax raise  city  government ‘s  revenue?

Question 4 :  (8 marks)

Suppose  th at  city government decides to develop a new housing area (i.e., the city government is  like  a monopolist).
Using appropriate diagrams to answer:

(a)  If the  city  government’s objective is to maximize profits, what would be the housing price  set in this new area ?
(b)  If the  city  government’s objective is to maximize revenue, what would be the housing price set in this new area ?
(c)  If the  city  government’s objective is to maximize welfare, what would be the housing price set in this new area?

Q ue stion  5:  (8 marks)

Find at least three countries or economies that have  housing policies or  measures to stabilize the housing markets.
Provide your views or suggestions on the best measure to stabilize the housing markets  that could be  considered or  used  in Melbourne .